The manager of the Bank of Mount Royal just phoned Daniel and offered the company same-day deposit for their cheques; this will reduce their availability float to one business day. The fee for this service will be $3,000 per year. Nathan and Daniel must decide whether this is a good deal or not. At the end of the business week, the partners ordered a large pizza and went to Nathan’s place to hash out their decision. They came up with the following list of questions: If the company’s customers’ average cash cycle and operating cycle are 30 and 40 days, respectively, what can we say about the company’s credit management policy of net 30? What is the company’s average daily collection float? What is its average daily disbursement float? (Use the average mail float to calculate the collection delay, use the average daily cost of goods sold to calculate the average daily disbursement float, and use the average daily credit sales to calculate the average daily collection float. What is the company’s net float?
The manager of the Bank of Mount Royal just phoned Daniel and offered the company same-day deposit for their cheques; this will reduce their availability float to one business day. The fee for this service will be $3,000 per year. Nathan and Daniel must decide whether this is a good deal or not. At the end of the business week, the partners ordered a large pizza and went to Nathan’s place to hash out their decision. They came up with the following list of questions: If the company’s customers’ average cash cycle and operating cycle are 30 and 40 days, respectively, what can we say about the company’s credit management policy of net 30? What is the company’s average daily collection float? What is its average daily disbursement float? (Use the average mail float to calculate the collection delay, use the average daily cost of goods sold to calculate the average daily disbursement float, and use the average daily credit sales to calculate the average daily collection float. What is the company’s net float?
Chapter11: Investor Losses
Section: Chapter Questions
Problem 23DQ
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The manager of the Bank of Mount Royal just phoned Daniel and offered the company same-day deposit for their cheques; this will reduce their availability float to one business day. The fee for this service will be $3,000 per year.
Nathan and Daniel must decide whether this is a good deal or not. At the end of the business week, the partners ordered a large pizza and went to Nathan’s place to hash out their decision. They came up with the following list of questions:
- If the company’s customers’ average cash cycle and operating cycle are 30 and 40 days, respectively, what can we say about the company’s credit management policy of net 30?
- What is the company’s average daily collection float? What is its average daily disbursement float? (Use the average mail float to calculate the collection delay, use the average daily cost of goods sold to calculate the average daily disbursement float, and use the average daily credit sales to calculate the average daily collection float.
- What is the company’s net float?
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